UAE has No Plans to Introduce an Income Tax or Raise VAT…

UAE has no plans to introduce an income tax or raise VAT, reiterated the Undersecretary of the Ministry of Finance on the sidelines of the World Governments Summit in Dubai.

UAE News:

India and UAE signed an agreement on the India-Middle East Economic Corridor (agreed on the sidelines of the G20 conference held in India last September) to boost trade and connectivity though few details of the agreement were disclosed. Separately, the two nations also signed cooperation agreements in electric interconnectivity, digital infrastructure projects and financial connectivity. Another agreement inked was to link its respective digital payment platforms (India’s UPI and the UAE’s AANI instant payments platform) and domestic debit & credit cards (India’s RuPay and UAE’s Jaywan) to facilitate easier cross-border transactions.

Dubai Chambers’ Quarterly Business Climate Index rose to 168 points in Q1 2024 (Q4 2023: 144). About 60% of respondents expect sales in Q1 to rise compared to Q4 2023 while 29% expect it to remain the same. About 41% are planning to expand into new markets (both regional and global) while one-fourth are focusing expansions within the local markets.

The Dubai International Financial Centre (DIFC) reported a 34% jump in new registrations (to 1,451 firms) in 2023. While the total number of active companies rose to 5,523 last year (+26%), total financial and innovation-related active companies grew by 22% YoY to 1,674. Employees in DIFC-based firms grew to 41,597, up from 2022’s 36,100.

UAE has no plans to introduce an income tax or raise VAT, reiterated the Undersecretary of the Ministry of Finance on the sidelines of the World Governments Summit in Dubai.

UAE exchange houses have received an approval to raise remittance fees by 15% (which equates to AED 2.5), for physical branches. Offerings via mobile apps are likely to remain unchanged.

MENA News:

Unemployment rate in Egypt fell to a record low of 6.9% in Q4 2023 (Q3: 7.1%).

Oman ranked 11th in the Global Entrepreneurship Index out of 49 countries in the Global Entrepreneurship Monitor (GEM) Report 2023-2024, up 27 places from the previous edition.

Remittances from Saudi Arabia and the UAE grew to USD 6.5bn between July 2023-January 2024, according to Dawn news, citing the State Bank of Pakistan data. Remittances from Saudi was nearly USD 4bn, almost 29% of total remittances inflow into Pakistan.

Holdings of US Treasuries increased in Saudi Arabia (2.98% MoM to USD 131.87bn), retaining its spot of 16th largest holder globally of US Treasuries. UAE’s holdings were up by 1.8% to USD 63.98bn while Kuwait’s rose by 7.6% to USD 46.3bn.

UNCTAD disclosed that the damage from the Israel-Hamas conflict was already 4-times that incurred during the 7-week war in 2014 and that Gaza would need a new “Marshall Plan” to support reconstruction.

FDI flows into Saudi Arabia grew by 6% YoY to SAR 52.9bn (USD 14.11bn) in January-September 2023, according to the Ministry of Investment. This is in line with the objective (as outlined in the National Investment Strategy) to increase FDI inflows to SAR 83bn by 2023.

Regional HQs can benefit from a 0% income tax rate for corporate entities and withholding taxes for a period of 30 years under this initiative, subject to certain terms and conditions. For example, exemptions from withholding tax are not applicable in instances of non-approved activities or of tax avoidance outlined in the rules. 

Aramco is planning to invest more into the chemicals and renewable energy sectors, according to the Saudi Energy Minister. Separately, Aramco’s CEO disclosed that capital expenditure which had been allocated to Aramco’s now postponed plans to boost oil output capacity will be used to expand into the gas, liquid and chemicals sector.

ACWA Power secured financing to build USD 3.4bn worth of solar energy plants across Saudi Arabia. The solar initiatives are part of the National Renewable Energy Program.

Global News:

Equity markets were mostly up last week, except in the US; Japan’s Nikkei rose to a 34-year high. Regional markets ended higher during last week, predominantly on strong corporate earnings reports; Dubai came close to touching a near 9-year high. Among currencies, Japanese yen was affected by the governor’s statement (on Friday) that monetary stance is expected to remain accommodative with GDP data indicating a recession. Oil prices inched up during the week on rising geopolitical tensions while the IEA reported that oil demand was slowing alongside an expansion in non-OPEC supply. Gold price fell for the second week in a row, while the dollar gained and expectations for a Fed rate cut were pushed forward (to June).

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